1. Ask and you shall receive / Trae Vasalllo’ life story: growing up in rural Minnesota, then going to Stanford to do a BS+MS in MechEngg / Robotics. She then joined IDEO out of campus - this was in the mid 90s - worked on iconic products such as BMW and Palm Computing. At Pam she worked on the Palm V and during the process of helping design and ship the product, was inspired by Palm’s CEO Donna Dubinsky, one of the few female CEOs in tech then. Like Donna she wanted to build and run a co. That took her to Stanford for an MBA. During the MBA she saw John Doerr of venture firm KPCB in campus, and told him about her background and asked about a company that was leveraging hand-held to solve business problems. John knew about Donna for he had backed her - he then connected Trae to Good Technologies, a co in the space she was keen on.
She joined Good Technologies after graduating from Stanford as the 3rd cofounder. She went through all the shebang. After a fair bit of struggle, they sold Good to Motorola for $500m. She then approached John again and he offered an EIR role, and then during this stint she got an offer from Apple to work on the iPod. At this point KPCB asked her to join the team. She then worked for KPCB from ’03 to ’14.
Ask and you shall receive seems to be the key element of Trae’s back story. If she hadn’t approached John Doerr that day in campus, who knows how her story may have turned out?
2. What she learned from John Doerr: John obsessed over OKRs (Objectives / Key Results) and coaching CEOs into building strong executive teams. He also did a great job of listening to entrepreneurs and drawing out the key insights. He was also awesome at connecting, like he connected her to Good Tech. In addition to these Trae also learn from John that venture is a service industry - you are working and helping the founder achieve their hopes and dreams and it is not about deals so much as investing in a partnership.
3. Leaving KPCB and starting Defy Ventures: As KPCB grew more successful and got bigger, and $20m cheques became more common than $5m cheques, Trae started missing backing truly early stage founders, She left KPCB in ’14 and after a brief health scare, which actually forced to question what she really cared for and missed, started Defy with Neil Sequeira, who similar to her had left General Catalyst after 11 years. They called it Defy because founders defy many existing shibboleths, and are defiant. Defy’s first fund was raised in ’17 ($171m). They closed their 2nd fund last year at $262m.
Defy focuses on the messy early stage - where they help the startup in getting to PMF, setting up the org, figure out the board etc. While they invest super-early to the occasional Series B, their sweet spot is $3-5m for 15-25% stake. They care about concentration and want to have a handful of companies they can actively work on and support. Fewer companies and thus larger stakes.
One of the key these they hold at Defy is that the lines between enterprise and consumer tech investing is blurring. Viral loops which are key to consumer startup success matters as much in B2B and build strong backend infra as B2B companies do applies equally to consumer startups. There are no hard lines any more.
She talks about their Sage program, which is their take on the typical Venture Partners program seen in the Valley. Unlike Venture Partners who are expected to bring domain expertise to funds, but often quickly lose this expertise after leaving their domains, Sages are full-time operators (typically CEOs). They have 5 Sages who continue to run companies in their domains and are thus experts, and are able to help Defy by weighing in on their portfolio’s challenges or recommend interesting startups etc.
4. How she keeps a beginner’s mind: To keep up with technology and to continue to be in touch with what is happening at consumer tech end, she does a lot of DIY stuff. She set up a Shopify store, set up an enterprise grade WiFi system. Understanding the underlying tech Is important. She coached the Robotics team in her kids’ school. All of this helps her be up to date with some or more aspects of consumer tech.
5. How founders can pitch better, especially now that they are pitching remote: VCs meet a lot of founders, and remote means video calls after video calls and all of the pitches become a blur. Hence it is important to be memorable to the VC. One slide she would love to see in every startup deck is the why you / why now slide - what led you to this point that is causing you to build this company and why do you think your team is going to win? And the even more important why now? So many people have a good idea, but the time is wrong. Often the idea itself is not new. But some kind of unlock makes it possible for consumers to adopt and makes this idea worth doing today. What is that unlock? And then the related question is why today instead of 6m from now. She feels this is an easy way to get an emotional connect by putting in this slide, and ideally before all of the usual slides on metrics etc.
Another way to register on the VC is by making it easy to visualise the product. Demo the product - A demo is worth a million words she says. Feeling and seeing helps VCs remember as VCs are jumping from co to co, and it is sometimes hard for them to recall a product. If your product is no ready, then do a video or a mocked up demo…but show something. Ideally your video or demo should show the value you provide the end user. For after all the tech is only useful as showing a consumer or customer problem elegantly.
6. The books she recommends: